Amending circulars with retrospective effect to take away rights conferred on exporters is not legally permissible.

JUDGMENT - LODHA R.M., J.:---The petitioner has approached this Court by challenging the Circular No. 39/2001 dated 6th July, 2001 to the extent it affects the rights of the petitioner prejudicially by making it operative retrospectively and the orders at Exhibits A-1 to A-7 whereby the petitioners brand rate applications have been rejected.

2. The petitioner is engaged in the manufacture/export of Dyed Polyester Viscos suiting fabrics (for short, "the processed fabrics"). In the Export and Import policy for the period 1997-2002 Duty Entitlement Pass Book Scheme (DEPB Scheme) was introduced. The objective of DEPB Scheme was to neutralise the incidence of basic customs duty and surcharge thereof on the import content of export product. The neutralisation was to be provided by way of grant of duty credit against the export product. The duty credit under the DEPB Scheme was to be calculated by taking into account the deemed import content of the said export product as per the Standard Inputs/Output Norms (SION) and determine basic custom duty and surcharge thereof payable on such deemed imports. It also provided that the value addition achieved by export of such product should be taken into account while determining the rate of duty credit under the Scheme. The DEPB Scheme clarified that the exports made thereunder shall not be entitled for drawback. It appears that the Central Board of Excise and Customs (for short, "the Board") vide its Circular No. 68/97 dated 2-12-1997 extended brand rate of drawback scheme under DEPB Scheme. It was done so because the exporters made representations to the effect that wherever fiber goods exported by them were not liable to central excise duty, the exporters were unable to avail of Modvat Credit of additional customs duty (CVD) paid in cash on imported inputs, or excise duty paid on indigenous inputs, utilised in the production of export goods and that the duties suffered by them were not fully compensated to them at the time of export. Acting on these representations of the exporters, the Board decided that the exports made under the DEPB Scheme of those products which cannot avail Modvat Credit on additional duty of customs (CVD) paid in cash on imported inputs or excise duty paid on indigenous inputs as no excise duty was payable on the export goods, would be entitled for payment of brand rate of drawback. The brand rate of drawback was to be fixed by the Director of Drawback against additional customs duty/excise duty suffered on inputs, on submission of proof of payment of duty by the exporters. The Board thereafter by Circular No. 39/99 dated 25-6-1999 issued the following circular:

"Circular No. 39/99-Cus., dated 25-6-1999 (From F. No. 605/145/97-DBK)

Government of India Ministry of Finance (Department of Revenue) New Delhi.

Subject: Extension of Brand Rate of Drawback Scheme to exports under DEPB Scheme - Reimbursement of Additional Customs Duty (CVD) paid in cash on imported inputs and Excise duty paid on indigenous inputs in export goods - Regarding.

Various representations have been received from Trade/Exporters that wherever final goods exported by them are liable to compounded levy of Central Excise duty, in such cases, the exporters are unable to avail of Modvat Credit of additional customs duty (CVD) paid in cash on imported inputs, or excise duty paid on indigenous inputs, utilised in the production of export goods; and thus the duties suffered by them are not fully compensated to them the time of export. Such situation presently pertains to steel re-rolling industry (Notification No. 33/97-C. E., dated 1-8-1997 refers) and processed fabrics (Notification No. 36/98-C.E., dated 10-12-1998 and 44/98-C.E. (N. T.), dated 10-12-1998 refer).

2. In view of the above, the issue has been examined in the Board and it has been decided that the exports made under DEPB Scheme of those products which cannot avail Modvat Credit of the additional duty of customs (CVD) paid in cash on imported in

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